On "Constructive Engagement" in South Africa

The United States is South Africa's largest trading partner, its second
largest foreign investor, and the source of one-third of its international
credit. US investments in South Africa, including investments made through
subsidiaries, are estimated at $4.4 billion. In addition, US investors hold
approximately $8 billion in shares in South African mining companies. US
companies engage in $4.8 billion in trade with South Africa, and US bank
loans to South Africa now stand at $4.5 billion.

US corporations control almost half of the South African oil industry, 75
percent of the computer industry, and 23 percent of the auto industry.
Leading US exports to South Africa included in 1983 $218.4 million in
aircraft and aircraft turbines -- 60 percent of South Africa's supply --
and $122.2 million in computers and computer parts -- 35 percent of South
Africa's foreign supply. The US imports one-third of South Africa's total
Krugerrand gold exports, a critical source of foreign exchange earnings.

For years, organizations and people across the world have been calling
for the United States and the other major foreign investors in South Africa
to disinvest from that country, to withdraw the economic support which they
are giving to the minority government and its apartheid system. The primary
response which US corporations have made against these calls has been that
serve as a positive influence on the treatment of blacks within South
Africa. Morgan Guaranty Trust Corporation has written that "the continued
presence in South Africa of US companies constitutes a source of economic
well-being for black South Africans, and can be a spearhead for improvement
in employment practices, as shown by the [Sullivan Principles]."

Many persons are reluctant to support US corporate disinvestment from
South Africa, because they wonder if this claim isn't correct. Do US
corporations serve as a positive influence on the employment practices of
businesses in South Africa? Do US companies benefit the black population,
offering training programs and better employment opportunities than do
South African companies? Defenders of continued US corporate involvement in
South Africa have seldom been forced to demonstrate the reality of these
claims.

US companies have been operating in South Africa since the turn of the
century -- far longer than the apartheid system has even existed. Apartheid
as such was instituted in South Africa after World War II and was modelled
on the US Jim Crow system. When Jim Crow was the legal system here, US
corporations were as discriminatory as ever and paid poverty wages to those
blacks which they did hire. Jim Crow, as a legally sanctioned system of
segregation, was later abolished in the United States, not as a result of
US corporations setting a good example, but as a result of popular
movements. Defacto segregation and discrimination have persisted in US
corporations in the United States even after they had been outlawed.
Numerous court battles and labor strikes and negotiations have been fought
to challenge these US company practices.

The same is true in South Africa. General Motors operated in South Africa
for 50 years before any black or colored persons were hired for salaried
positions.

One of the key features of the apartheid system is the regulation of work
and employment practices which keep the wages of black workers low. This
has included government recognition and protection of white unions and
multi-racial unions controlled by whites. As long as the South African
government refused to recognize and protect any independent black union, US
companies refused to sign an agreement with any of them. Only in 1979, when
the popular political pressures in South Africa forced the government
recognition of independent black and multi-racial unions, were the unions
able to force US companies to bargain with them.

This recognition has been forced upon the companies through strikes and
other union activities. Many US companies still refuse. At City Investing
the Metal and Allied Workers Union has been struggling for recognition. 140
workers there were dismissed for their strike activity. Coca-Cola only
signed an agreement in March of 1984 after strikes in 1981, 1983 and 1984.
The Columbus-McKinnon corporation has fought a recognition agreement for
two years and refuses to bargain at the plant level.

US companies have never advocated or supported the organization of black
workers, because the US corporations profit from the lower wages and
working conditions that apartheid encourages. When the Kellogg corporation
signed a recognition agreement, the union won a 58 percent wage increase.
At Borg-Warner, in 1980, the new auto workers union won a doubling of the
monthly wage. In 1984, they won a further wage increase of 23 cents, up to
$l.65 per hour.

United Technologies' Otis Elevators subsidiary has a closed-shop
agreement with a white-only union. Ninety-eight percent of all black
workers at Otis Elevator are in the lowest half of the job grades, while
only 18 percent of the white workers are. The average wage of the black
workers is $398 per month. For the white workers it is $1911. None of the
black workers at United Technologies' Airco subsidiary are organized. At
Tidwell Industries the Metal Workers Union steering committee members were
fired when they approached the management for union recognition last year.
The 1984 maximum monthly wage of a black worker at Tidwell was $163. At the
end of last year, Union Carbide's Tubatse subsidiary fired the entire black
workforce and cancelled its recognition agreement with the union.

US corporate claims to acting as a positive influence in South Africa
rest primarily upon their implementation of the Sullivan Principles. These
principles include a call for non-segregation in work facilities, equal
employment practices, equal pay for equal work, training programs for black
workers, increasing the number of black management personnel, and improving
the quality of life for workers outside the workplace. Companies operating
in South Africa have been encouraged to sign these six principles and
submit themselves to a review of their performance. Recently added has been
a principle of active advocacy for political changes away from apartheid.

Of the 284 US companies operating in South Africa, only 128 have even
signed the Principles. In 1984 over one-half of the signatories either
never reported or received a failing grade.

Ford Motor Co. has proudly spoken of itself as a leading supporter of the
Sullivan Principles. It touts management training centers and desegregated
cafeterias and other evidence of its progressive influence. Yet, the black
auto workers at Ford South Africa have been forced to strike in 1979 and
1982, and the union has long accused Ford of refusing to negotiate in good
faith. In the 1982 strike, Ford closed its plants when the union demanded a
$2.16 per hour minimum wage against Ford's $1.90 per hour offer. Last year,
1500 Ford workers went on strike to protest the layoff of 490 workers. An
additional 800 workers were put on layoff later that year.

US corporations continue to operate in South Africa because it is
profitable. Apartheid makes it very profitable. These corporations pay
millions of dollars in taxes which pay for the police, prisons, weapons,
and armaments that maintain the apartheid system. They sell the government
its armored personnel carriers, its computers and communications
technologies. Westinghouse has sold South Africa several licenses for the
manufacture of nuclear power facilities.

And every US industrial facility is integrated into the civil defense
plans of the South African government. That is, General Motors cooperates
in working out plans for securing its plants in the case of civil unrest.
This includes arranging for and paying for the police and security forces
necessary. More importantly it includes turning over its facilities for
military production at the direction of the South African government.